Reference no: EM13606297

The Fisher Merchandising Company currently sells products only through its store in Lowell, MA. The company's expected income statement for store operations in March is presented below.

Fisher Merchandising Company
Income Statement (for Store Operations Only)
For the Month Ended March 31

Sales $400,000
Cost of Goods Sold $240,000
Gross Profit $160,000
Operating Expenses $112,000
Income Before Taxes $48,000
Income Taxes Expense $16,800
Net Income $31,200

In addition to continuing its store sales, the Fisher Merchandising Company is considering expanding sales in April by selling through catalogs. The company expects to make catalog sales of $30,000 in April. The company expects its cost of goods sold to continue to average 60% of sales. Catalog operating expenses, other than uncollectible accounts expense, are expected to be 19% of catalog sales. The company's income taxes rate is expected to continue to average 35% of income before taxes. Although the company collects all its accounts receivable resulting from store sales, it expects to collect only 98% of catalog sales. Determine the expected cost of goods sold for the company's April $30,000 catalog sales.

A) $3,705
B) $18,000
C) $12,000
D) $30,000
E) $6,000